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NLIHC Comments on HUD’s Proposed NHTF Rule

In formal comments sent to HUD on December 28, 2010 on its proposed regulations to implement the National Housing Trust Fund (NHTF), NLIHC applauded the department for requiring extremely low income (ELI) households to occupy 100% of rental and homeowner units produced in the program’s first year. However, NLIHC raised several concerns about HUD’s proposal for NHTF implementation.

NLIHC’s major objection to the proposed regulations is the failure to base rents on tenant income, specifically on the “Brooke rule” that requires that assisted households should spend no more than 30% of their income on rent and utilities. HUD is proposing that rents be set at 30% of the greater of 30% of the federal poverty line or 30% of area median income.

Under HUD‘s proposal, families or individuals with income that is substantially less than 30% of area median income will be faced with high housing cost burdens. For example, people whose income is Supplemental Security Income (SSI) are at 18.6% of the national median income. Without income-based rents, most of the people who the NHTF is intended to serve will not benefit because the rents would be far more than what they could afford.

Also, HUD’s proposed rule limits the use of NHTF dollars for operating assistance to 20% of a jurisdiction’s allocation, as recommended by the NHTF campaign in 2008. However, the proposed rule would not limit operating assistance to units occupied by ELI households paying Brooke rents. This could result in ongoing operating subsidies maintaining units unaffordable to ELI households, an outcome at odds with NHTF’s fundamental purpose.

Among NLIHC’s other comments:

·HUD proposes requiring NHTF-assisted units to be affordable for only 30 years. NLIHC urged 50-year affordability periods with preferences for projects with longer timeframes.

·NLIHC opposed HUD’s proposal to allow use of NHTF dollars for transitional housing. The statute does not specifically allow transitional housing and states that the program’s purpose is to increase and preserve the supply of rental and homeowner housing, especially for ELI households. This strongly implies that permanent housing is the goal.

·NLIHC recommended that public housing agencies be explicitly listed as eligible recipients, but commended HUD for prohibiting use of NHTF resources on existing public housing units. These units are extremely important, but using NHTF dollars to rehabilitate or operate them will not increase housing opportunities for those with the lowest incomes. It also could result in the overall loss of resources if Congress reduces appropriations for public housing due to the availability of the NHTF.

·NLIHC was pleased that the proposed rules would require states to distribute NHTF resources based on priority housing needs, and require grantees and subgrantees to choose applications for funding based on such priorities as geographic diversity. However, these provisions are not sufficient to ensure that rural housing needs are met. NLIHC suggested that the final rules directly require states to allocate NHTF resources based on relative need in both rural and urban areas.

·NLIHC commented on the technical aspects of many features, including subgrantees, transit oriented development, allocation plans, public participation, tenant protection, record keeping and performance reports.